Today, pivoting has taken a casual turn

A decade ago, pivoting happened serendipitously. People chanced upon a business idea, while they were headlong into their first business idea, and changed tracks.

Today, however, pivoting seems to have taken a casual turn. Startups have started depending on it, almost as a first option, and believe that if they keep shifting gears, they will eventually succeed.

What we need to understand is that pivoting is a tool, a strategic tool that you can use positively and negatively. It has the potential to help or hurt a company. There are enough examples in the startup world or the business world where it has worked very successfully It is best to understand the pros and cons with examples.

The Good Pivot

Let’s look at Slack, which has become a unicorn in the last two years. Messaging was not their first idea; they started as a gaming company that failed. The team was very talented and strong. They wanted to stick together and they built a messaging platform from their desire to create something new, out of their experimentation.

As email became cumbersome for many people, messaging came to the fore. But messaging isn’t new, so Slack didn’t have to invent an entirely new communication system. They sought inspiration form Internet Relay Chat, the foundation for early internet chat services. Through Slack, messages can be addressed to a channel, not just individuals, and the channels can be private. Smells like innovation.

Slack’s pivoting was successful. Here’s why. Successful pivoting happens when strong teams that have expertise in certain areas are trying to figure out what is the right product that can emerge from that expertise. Even Snapchat succeeded after 24 failed ideas. It is about leveraging team talent to build something unique.

Successful pivoting happens when sparse, frugal lifestyles of passionate entrepreneurs do not lead to any cash burn. There is no cash to burn and passion is the fuel.

Slack raised the big money after they got a successful product, not before. The Bad Pivot So when and why does pivoting fail? Pivoting is not successful when money is raised before the big idea or product. Take the case of Clinkle, an example of failed pivoting.

Lucas Duplan, then 22 years old, having finished a computer science degree at Stanford, was living the supposed Silicon Valley dream with his startup Clinkle, a secretive payments company that had raised $25 million in funding three months earlier on the wisp of an idea — payments with sound wave technology.

The post-fund raising exuberance lasted less than six months, as Clinkle began 2014 with layoffs and unusual departures of several high-profile executives, who had been recruited from places like Netflix and Yahoo! to move the company beyond the startup phase.

Moreover, the company, which had yet to launch a product, lost its technological edge to new products like Venmo, a peer-to-peer payments app, and later Apple Pay, which achieved what the company had originally set out to do. They tried more ideas, but now Clinkle has shut down.

The basic point is this, funding does not offer room to pivot. In fact, it kills pivoting. Most investors are not domain experts. When ideas start to fail, investors cave in and start micromanaging. And God forbid, if they start seeing the founder as a failure, it will make him chase the wrong goal and hit numbers without a purpose. This is a common theme in failed pivoting. A set of founders who comes up with an idea that didn’t work, tries desperately to pivot under pressure from VCs, to save face or money.

A genuine, inexpensive desire to build something delightful is replaced by the VC saying, “I won’t let you shut down, so you better come up with something.” Pivoting should be organic and emerge from the passion of the founders. Number-centric pivoting is forced, inorganic and often a failure.

Silicon Valley, in particular, has done a great job of producing multi-billion-dollar innovations and jobs at a time when the economy needed them the most. However, their impact on our lives isn’t quite what some of us tech optimists had hoped it would be. We need products that solve the problems of the world as we know it today. That calls for energy and passion.

(The author is founder of EdCast, a social knowledge network based in Silicon Valley)